IMMC Corp. v. Erickson, No. 18-1177 (3d Cir. 2018)
Annotate this CaseIn 2008, IMMC filed a Chapter 11 bankruptcy petition in the District of Delaware. The liquidating trustee filed an adversary proceeding, alleging that Appellees, IMMC’s former officers and directors, had breached their fiduciary duties by pursuing a risky and costly litigation strategy in an unrelated suit against a competitor, overcompensating themselves in the process. In 2011, the Bankruptcy Court held that it lacked jurisdiction to hear the adversary proceeding, rejecting arguments that the adversary proceeding was a “core” proceeding or that the adversary proceeding was a non-core proceeding “related to” a Chapter 11 case. The trustee did not appeal. The Bankruptcy Court then considered the trustee’s request to transfer the adversary proceeding to the Eastern District of Pennsylvania under 28 U.S.C. 1631 and concluded that it lacked authority to transfer the adversary proceeding. The district court and Third Circuit agreed. The Bankruptcy Court lacked authority over the claims in the adversary proceeding. Exercising jurisdiction over the adversary proceeding so as to transfer it under section 1631 would have been ultra vires, regardless of whether bankruptcy courts fall under section 610’s definition of courts as referenced in section 1631. The court noted that bankruptcy courts have limited authority.
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